KRAKEN CEO JESSE POWELL ADMITS THERE IS “NO DEFENDING THE RECENT STATE OF THE [KRAKEN] PLATFORM”; SILVER MILLER FILES NEW CLAIMS
December 13, 2017 | Back to News
While cryptocurrency exchange Payward, Inc. d/b/a Kraken (“Kraken”) has advertised itself for years as being the “best Bitcoin exchange” and has claimed that it provides “sound and reliable” access and support every hour of every day of the year, Kraken’s own Chief Executive Officer (Jesse Powell) has publicly conceded that Kraken’s promises of security and reliability are false and that Kraken’s business operations have long-been broken beyond repair. In a recent Reddit exchange with users, Mr. Powell admitted that there is “no defending the recent state of the platform” and that Kraken has given up “applying more Band-Aids” to its irretrievably broken system. Rather than shutting down its system or even notifying its users of the known flaws that pervaded its platform, Kraken pretended that everything was fine and continued charging its standard fees for services that even Kraken knew were substandard. In many instances, accountholders who complained of harm as a result of the slowdowns, shutdowns, security gaps, and system failures at Kraken were stonewalled by Kraken, which defended its refusal to compensate those injured clients in the face of what even Mr. Powell himself has described as an indefensibly-broken platform.
Earlier this year, Silver Miller — along with the Wites Law Firm — commenced an arbitration proceeding against Kraken on behalf of more than two dozen aggrieved Kraken accountholders who were victims of Kraken’s various system failures and who suffered damages calculated at nearly Eighteen Million Dollars ($18,000,000.00). Since Mr. Powell’s public statements, nearly a half-dozen more Kraken users have joined the action, where the total damages claimed in a just-filed Amended Statement of Claim are now nearly Thirty Eight Million Dollars ($38,000,000.00). Some of the victims had their margin accounts at Kraken forcibly liquidated in a May 7, 2017 “flash crash” that saw Kraken’s Ether market plummet nearly 75% in value, only to see the value restored to nearly its full value an hour later. Some of the victims suffered from Kraken taking too long to process trading orders or, in many instances, repeatedly rejecting valid trading orders because Kraken’s system was overwhelmed and could not handle the user traffic. One of the victims alerted Kraken of a hacker’s infiltration into his account and was assured by Kraken that his account assets were fully secured and could not be moved . . . and the victim then watched in horror later that day as the hacker emptied the user’s account with no interference from Kraken. While the path to their harm varies slightly, the common theme amongst all of the victims is that they suffered at the hands of Kraken’s malfunctioning, or non-functioning, system and porous security protocols.
We will vigorously pursue our clients’ claims until Kraken’s actions match up with its own CEO’s words: that there is “no defending” the problems at Kraken that caused our clients’ harm, and that each injured claimant should be fairly compensated for his loss. Anything less would belie the public statement Mr. Powell gave last year when working with a court-appointed trustee to unwind the harm suffered by accountholders at the now-defunct Mt. Gox exchange: “Kraken is proud to volunteer our resources and expertise in an attempt to minimize damages to [victims], restore faith in the Bitcoin community, and demonstrate trusted leadership in the industry.”
Silver Miller currently represents the victims in lawsuits against multiple cryptocurrency exchanges (Cryptsy; Coinbase; Kraken). If you have lost money at a cryptocurrency exchange or are concerned that the services advertised to get you to open an account were not matched by the services actually provided to you as an accountholder, contact Silver Miller contact us for a no-cost, no-obligation consultation to discuss your legal rights.
See the Amended Statement of Claim:
[Confidential] v. Kraken